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Exam 13: Corporations: Organization, Stock Transactions, and Dividends

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Question 71

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If 20,000 shares are authorized, 15,000 shares are issued, and 500 shares are held as treasury stock, a cash dividend of $1 per share would amount to $15,000.

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B) False

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Question 72

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A corporation, which had 18,000 shares of common stock outstanding, declared a 3-for-1 stock split.

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Question 73

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What is the total stockholders' equity based on the following data?

Which of the following amounts should be disclosed in the stockholders' equity section of the balance sheet?

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

How is treasury stock shown on the balance sheet?

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000.

The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets.

Which one of the following would not be considered an advantage of the corporate form of organization?

Match the following stockholders equity concepts to the appropriate answer.

The Dayton Corporation began the current year with a retained earnings balance of $32,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared cash dividends of $7,000. Compute the year end retained earnings balance.

One of the prerequisites to paying a cash dividend is sufficient retained earnings.

Alma Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

Paid-in capital may originate from real estate donated to the corporation.

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Determine the dividends per share for preferred and common stock for the second year.

A corporation has 50,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be

The declaration and issuance of a stock dividend does affect the total amount of a corporation's assets, liabilities, or stockholders' equity.